In theory, every investor must read the prospectus before investing their money. In practice, it is generally accepted that few investors do. The document is considered too long, too disjointed and too full of legalese to be accessible to most investors.
That may be changing. This month, La Française is releasing a completely new — and far shorter — prospectus for its flagship SICAV in Luxembourg. The firm is one of the first asset managers in Europe to completely reengineer its prospectus to be more useful to investors as well as others who may refer to the document, such as intermediaries, service providers and regulators,
“We undertook this substantial endeavor because we felt our prospectus did not send the right message to our clients,” said Isabelle Kintz, Conducting Officer at La Française AM International. “The language in the document wasn’t accessible or very helpful, and the entire look and feel – and length – of the document sent a negative message of its own.” A growing set of new regulations has also made product disclosure much more complex and challenging to manage for asset managers.
The new document uses only 26% of the pages of the old one, yet it is considered legally sufficient by the firm’s internal and external lawyers, and the CSSF considers it to be fully compliant with regulations. The language is written and structured so that specific modules can be exported to related documents, such as KIIDs, fact sheets, notices and marketing material. “The prospectus becomes more than just a compliance document,” says Kintz. “It becomes a tool that helps us manage content across documents and ensure consistency of language.”
La Française developed the prospectus in conjunction with More Carrot, a clear language and information design firm that specialises in this type of work for financial services firms. More Carrot recently invented a process for “re-engineering” SICAV prospectuses, and the La Française project team was keen to use and adapt the new More Carrot model.
“Prospectuses in general are rather far from being investor-friendly, so anything less than a complete transformation would not really be enough,” says Bernard Lambeau, Head of European Operations at More Carrot. “For this project, we used a clean-sheet process, which involved the collaboration of many different people at La Française. They were a great team, fully committed and highly knowledgeable, which is reflected in the final product.”
